In the Keynesian-Cross Model with a Given MPC > 0

question 6

Multiple Choice

In the Keynesian-cross model with a given MPC > 0, the government-expenditure multiplier _____ the tax multiplier.

• A)is larger than
• B)equals
• C)is smaller than
• D)is the inverse of the

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Definitions:

Recession

An interval of economic deceleration, involving a fall in business and industrial activities, often recognized by a drop in GDP across two sequential quarters.

Sharp Recession

A severe and rapid downturn in economic activity.

Unemployment Rate

The fraction of the total employment market that remains without work but is eagerly searching for jobs and is willing to be employed.

Severe Recessions

Extended periods of economic decline around the world characterized by significant reductions in economic activity, high unemployment, and often deflation.